Grades are Posted!

I just entered your grades.
I really enjoyed teaching this semester. I learned a lot and I hope you did, too.
I may post the solution to the final if anyone is interested.
Grades on the exam:
A: 10
B: 4
C: 4
D: 3
F: 5

Average was a 78%.

Earlier in the semester grades were fairly evenly distributed about the mean. On this last test they were certainly skewed towards the higher end. Well done!

Grades for the course:

A: 8
B: 5
C: 8
D: 3
F: 4 (includes some who dropped.)

Overall, not bad.

Send me an email anytime if you have questions about econ, ethics, or liberty!
ndsnow@gmail.com

Nathan

Calculator

You will want to bring a calculator with you Wednesday night for the exam.

Final Exam

Okay,
I have written the exam, and will take it to the copiers soon.
I've decided to include some multiple choice, 10 questions.
Then there are several short-answer questions.
Some math questions follow.
And there are a few extra credit problems.
Everything on the exam has been covered in class, and most of it was also touched upon in the text.

I am accepting Extra Credit essays by email now. Actually, it is easier to grade them on-screen than on paper.

See you @7:30 on Wednesday
Nathan

Extra Credit, and HW Solutions

For extra credit, you may write a 2-3 page essay describing an example of the "Bootleggers and Baptists" phenomenon. In class I said it will count as an extra 3.3% of your grade. If you do it, you can earn an extra 3.3 points toward your final grade for the course, not for the test.
You might want to download this podcast and listen to it to better understand the idea.
Please don't use bootleggers and Baptists as your example. Part of how I grade this will be based on your being able to recognize unique examples of the phenomenon.

Also, your HW solution set is here.
Please feel free to email me with and questions or concerns. I will be on campus various times over the next week if you need to meet with me.
Nathan

Note of HW #3, Problem #1

I had a typo. If you have already done the problem, then disregard, but if not, the equation for the second demand curve should have read:
Q2 = 10 - 0.05P2.
You can see I got the decimal in the wrong place on the assignment.
Again, if you have already done the problem, don't worry about it, this was my mistake, but if you have not done it yet, this correction could make the problem a little more straightforward, and I daresay, interesting.

The Final Exam

I will offer some discussion about the final exam this week in class, and perhaps here at the blog before the exam.

For now, I will say that the exam is cumulative. There will be questions based on the material from every portion of the course. I am thinking that there will be 12-16 problems total, with a structure similar to the midterms.
You should look back on your old exams and homework assignments, look at questions from the ends of the chapters in the text, and make sure you know the graphs, and what belongs on which axis.

There will be at least one, if not two extra credit questions, which should help any of you who are struggling to improve your grade.

That's all for now,
Nathan

On Q #4 from HW #3

For part b of question 4 on HW #3:

4. Savings and interest:

a. How much money should I save each year if I want to have $100,000 saved in 10 years, if I put the money into a savings account earning 5% interest compounding annually? If I can earn 10% in the stock market?
b. How much should I be willing to pay for a $1,000 bond redeemable in 5 years if my personal interest rate is 5%? 10%?

Assume that you will be redeeming the bond for its face value in 5 years, with no payments until then.

Nathan

Christmas?

Some of you may have begun shopping for Christmas. If you really want to bless people this year, you can tell them exactly what you want.
Read this 5 pager for more.

Game Theory at Yale

Find the Yale Game Theory lectures with video here. Really great stuff, and fun.

Also, if you really want to see them again, the Golden Balls videos are here and here.

Enjoy!

HW 3 and some comments

Okay, so we have 2 more class meetings and then a final exam.
Tonight I will discuss a little monopoly (Chapter 8), some oligopoly and game theory (Chapter 10), and perhaps a bit of the economics of time (Chapter 15), Gumballs paper. You should download this paper and read it. It is an easy read.
I have your homework assignment written, and you can download it here.
You should also have read J.D. Rockefeller and the Oil Industry by Burtom Fulsom, Competition (Except where Prohibited by Law) by Thomas DiLorenzo, Occupational Licensure by Milton Friedman, and Outrageous CEO Pay by Hans Sennholz.
For next week you will want to read Bootleggers and Baptists by Bruce Yandle.
Please don't hesitate to email me with questions.
Nathan

Tests are Graded

I just finished grading the tests.
The average (after the curve) was a 75%. That is, 75 was both the mean and the median grade.
The grades were very normally distributed (which is a good thing).
The high was a 105, and the low was a 44.
The distribution is as follows:
F 40's: 1
F 50's: 3
D 60's: 7
C 70's: 6
B 80's: 7
A 90's: 4
A 100s: 1
29 people took the test.
Overall, the grades were lower than the last test, but more concentrated about the mean. The highs grades were not as high, and the low grades were not as low.
See you Wednesday.

Nathan

Midterm 2 Solutions in pdf

I am still grading your tests. There were several good answers on these tests, some which caused me to rethink the problem myself. Posted is one set of solutions. I am grading the tests one problem at a time. The solution to #4 is difficult, and I will be grading this problem more leniently. I wanted to give those who had thought the geometry through a little more to have the chance to show me what they could come up with.
That said, we will cover oligopoly this week, and a bit of review on monopoly, so be sure to have read Ch. 8 and the story of Rockefeller, which is part of the book, Myth of the Robber Barons by Burton Fulsom. You can read a short speech by this author in which he mentions the ideas in this book by clicking here.

Studying for the Exam

1. I told the class that there would be one question on the Hayek paper, and an extra credit question on the Alchian, Demsetz paper. Read this if you have not already.
2. The questions will be similar to those you did for homework, and similar to those in the text.
3. Economics is cumulative.
4. The focus will be on new material from Chapters 5,6,7,14 (13 in the older edition).
5. A lot of people did not turn in Homework 2. Why?
6. Get good rest and carbs and protein before the exam.
Good luck!

Homework 2 Solution Set

Update: The link is fixed.

Here is the link to a pdf of the solution set to HW 2.
Since these questions were mostly out of the text, the solutions are mostly those provided by the authors. Perhaps you will find these helpful. If you have questions, please do not hesitate to ask.
Nathan

All Better Now

Okay, so I discovered a way to connect links here at the blog to the documents you need. In the posts below are included links to the psf of past week's slides and further down a link to the Homework Questions out of the new text edition.
You should be all set to do the homework, reading, and start studying for the second midterm.
Nathan

Last Week's Slides

Here's a link link to pdf of last week's slides.

Just what I Feared.

So, the site I was using to host documents for class has changed its format and won't let me do it anymore. Very frustrating. The whole reason I did not use blackboard was because this happened with them last semester. Ugh.
Anyway, I have posted most of the documents for class at google documents and shared them with you.
You should have gotten a few emails with links to these shared documents. If not email me right away!!!!
If you are having any trouble accessing these items, please let me know. I will check my mail a few more times over the weekend to make sure everything is working well.
I have arranged to meet with one student on Monday at 11 am. Any of you are free to join us, provided you send me an email. We will meet for extra help-office hours on the 3rd floor of Enterprise.
Otherwise, you should be reading Ch. 7 of the Hirshleifer text, The Coase paper "Nature of the Firm" and Alchian, Demsetz, "Production, Information Costs, and Economic Organization."
All this, plus you have to get your homework done!!!
You can do it!

Classmate request

One of your classmates makes the following request:

Could you please post the essay and the names of the authors for the essay we are responsible to read after the second midterm. the following 5 authors and titles of their essays.


October 7 Price Controls: Hugh Rockoff, Rent Controls: Walter Block
October 14 Use of Knowledge in Society: F.A. Hayek, Order From Chaos: Thomas Rustici (not publicly available, only in published anthology, no exam questions from this essay)
October 21 Middlemen: Frederic Bastiat (one of my favorites)
October 28 The Nature of the Firm: Ronald Coase
November 4 Production, Information Costs, and Economic Organization: Armen Alchian and Harold Demsetz (econ gods from UCLA, recently got to hear Demsetz speak in person, awesome!)

Homework assignment

Update:
Try this link to get the questions out of the new text edition in pdf.


I just assigned you problems out of the textbook.

From Chapter 5,
For Review: #1,
For Further thought and Discussion: #9, 10

From Chapter 6,
For Review: #1, 14
For Further thought and Discussion: #6

From Chapter 7,
For Review: #5, 8
For Further thought and Discussion: #1,6
Since I have not yet covered Ch 7 in class you may choose 2 of these to complete.

From Chapter 14,
For Review: #5,
For Further thought and Discussion: #13

If you desire some extra credit you may write a short essay (1-2 Pages) on Ronald Coase's "The Nature of the Firm"

Later today I hope to post a pdf of the pages with questions on them from the new edition of the text, since those of you with older editions will have different questions.

Nathan

My Letter to the Editor Published

This letter to the editor of the Durham News was published on October 28th.

In his October 10th column Primary Turnout Sets “New Low” Jim Wise points out that $175,000 was spent on Durham’s City Council Primary election where only 5,988 individuals voted. The assumption is that $29.23 a vote is too much to spend. This analysis perceives the end of free elections to be the action of voting itself, instead of the results of those elections.
What does voting do? It resolves the question: How will we make collective decisions?
How greatly do we value this resolution? If the election costs $175,000, fine. If that works out to $30 per participating voter, so what? If more voters participated, the average cost would have gone down, but the total cost may have increased, and the total opportunity cost (in terms of voter's time) would absolutely increase.
We can possibly be pleased when voter turnout is low, since it represents a more efficient resolution of the relevant question: How to make collective decisions. If there is little contention between candidates, then there is greater agreement within the community, so we will want to expend fewer resources on elections.

It is easy to say we want more people to vote, but it is not necessarily true. The group most likely to complain about voter turnout is the one whose candidate lost. Otherwise, it does not matter how many vote, only how many are pleased with the outcome.

Nathanael Snow

Economics for the Citizen (and You!)

A few years ago Walter Williams published a series of 10 essays in his weekly syndicated column. I here link you to a pdf of these 10 essays for you to read. This is not required reading (you won't be tested on it) but many of the examples should be quite familiar to you, and it could be helpful to reflect from these examples.
This is in part because Williams was my professor, and I have stole several of these examples from him. Part of this is because Williams' professor was Armen Alchien, and I have had 3 other professors who also had Alchien as their professor, and many of these stories originated with Alchien. So I've heard them all a few times.
And it won't hurt you to hear some of them again either.
The full document is 10 pages. Should take you no more than half an hour to read through. You might want to read some of Williams' more recent columns, too. They are always very good.
Nathan

Getting Help

Okay, so some of you did poorly on the first midterm. Don't fret. There's another test coming up and the last one only accounted for 1/4 of your total grade, and I'm willing to whittle that down some if you do well on the next two.
If you need some help, if you want to go over the test material, or other topics from class, I am more than willing to sit down with you and go over your questions.
Here's how this works:
1. You contact me about wanting help. Email me.
2. I will divide 2-3 hours of my time per week among however many students request help. I am somewhat flexible in my schedule, so there are various times we can meet. If nothing else works we can try to meet by phone or instant messenger.
3. You bring questions, specific questions, to me. "Can you teach me the material from chapter 3?" is not a question. You have to show that you have done due diligence to understand the concept on your own. Bring whatever work you have done to our meeting so I can analyze your thinking. I have been an educator for over 10 years, though only recently teaching at the university level, and I am quite skilled at discovering mistakes and anomalies in students' thinking.
4. You work hard and score better on the next tests.
5. You give me a glowing teacher evaluation at the end of the semester. Heh, heh.
Okay, so the email is:
ndsnow@gmail.com
or nsnow1@gmu.edu
I am waiting to hear from you.
Nathan

De Gustibus non Desputatum Est, and Diminishing marginal Utility

After you are done grieving or rejoicing over your tests, take a moment to watch this video. I must say I feel the same about lectures most of the time.

Test Solutions

You can download a pdf of the test's solutions here.
There are some notes about the grade distribution there as well.
We will take a few minutes to answer questions about the test in class, but if you take the time to read through the pdf, most of your questions should be explained.
As always, you may email me with questions, or comment here.
Nathan

Hicks / Slutsky derivation of demand pdf

Click here for a pdf of the notes I was working off last week in explaining the Marshallian, Hicksian, and Slutsky derived demand curves.

HW 1 Soulution Set

Click here for the solution set to HW 1

HW probelm #5 c, & d

c. The question asks you to find the equation for the PEP. It allows you to set Py to 1.
This is really just a trick of algebra.
Which variables should be present in the PEP? What variable is it attempting to show? You should figure out which variables are on the axis for the PEP, and solve for the variable it is showing in terms of these.
Any equation in terms of the variables on the axis which demonstrates the right relationship will be sufficient.
d. Apply the same process, but ask which variables are on the axis of the IEP graph, and which variable is being allowed to vary.

These were the two hardest parts of the set and were designed to see who could solve them. I will weight them accordingly.

See you in class tomorrow.

Reading Week 4

You've got the first HW assignment to finish by Wednesday this week. I will be posting the solutions Wednesday night online so you can study from them for the exam on the 7th of October. No late HW will therefore be accepted!!!
Reading:
1. Through Ch. 4 of Hirshleifer.
2. RSM The Formation and Function of Prices by Hans Sennholz.
3. Freedom's Theory of Value by Leonard Read (BBG #8) is a good review of the subjective theory of value. It's also a bit of a screed against Marxism...

See you Wednesday!

HW 1

You can download a copy of HW 1 here.

Reading Week 3

By Wednesday you should have read:
1. through Chapter 3 of the Hirshleifer text, and started Chapter 4. The test will cover all of Chapter 4 and everything up to it.
2. "To Drill or Not to Drill: Let the Environmentalists Decide" by Dwight Lee, originally printed in The Independent Review, Fall 2001.
3. Reading #'s 3, and 17 from the BBG Reader. The Broken Window by Henry Hazlitt is a crucial paper, and more than fair game for an extra credit question. Charging All the Traffic Will Bear is a classic demonstration of good economic writing by Leonard Read, who also wrote the I, Pencil essay you read.
4. Looking ahead, you will want to give The Formation and Function of Prices by Hans Sennholz a good reading or two. This essay is in both the RSM reader and the BBG reader (#61).

Comparative Advantage Game

Here is a link to the game I showed you at the beginning of class last week. Take your time and play through it a few times. Be sure to read the directions and explanations. Try the advanced game where you adjust the settings, too.

Reading Week 2

I'm sorry I did not post this sooner (though you have the syllabus).
For this week's class you should have:
1. Re-read Chapter 2, of the Hirshleifer text, and started Chapter 3.
2. Read R.A. Radford's The Economic Organization of a POW Camp. This is a very important reading!!!!
3. Reading #18 from the BBG reader is long and a little complex. You may want to read this a few times over the next several weeks, since it will make more sense each time.
4. The Puzzling Questions of Vital Concern... is the first chapter from Henry Grady Weaver's The Mainspring of Human Progress. This book was one of a small handful which motivated me to pursue Economics. It is recommended, but not required.
5. You may skip the BBG reading #14. I have just looked at it again and there's too much religious language.

Syllabus download in word

If you'd like to download a word doc of the syllabus click here.

Reading Week 1

Class, please remember the reading assignment.
1. Chapters 1 and 2 of the Hirshleifer and Hirshleifer text.
2. "I, Pencil" by Leonard Read from the Rustici, Snow, Milton anthology.
3. Readings 1, 3, 19, 49 from the Free Market Reader.
4. The syllabus also mentions "Wanted, An Unpractical Man" which was the basis for my presentation at the beginning of class. This is taken from chapter 2 of "What's Wrong With the World" by G.K. Chesterton, available at Gutenburg online for free.

Textbook Woes

I am paying attention to the textbook availability situation. Please keep me informed of new developments on this front.
I just came across another free online text which you may find helpful: R. Preston McAfee's Introduction to Economic Analysis. Available here.
Also, feel free to post links of things you find interesting or helpful to the comments of this blog.

Definitions

Economics:
Economics is the study of the principles governing the allocation of scarce means among competing ends when the object of the allocation is to maximize the attainment of those ends.

Scarce:
Things are scarce when human wants exceed the means to satisfy those wants.

Factors of production:
Labor:
All of man’s physical and mental talents that are used in the production of goods and services.

Wages:
Payment to labor, price of labor.

Land:
All natural resources.

Rent:
Payment to land.

Capital:
Man-made aids to production which enhances / increases production.

Interest:
Payment to capital.

Entrepreneurial Talent:
The resource that combines other factors of production in the capacity of a decision-maker, risk-taker, and innovator.

Profit:
Payment to entrepreneurial talent.

Economic Behavior:
Production:
Creation of utility.

Utility:
Usefulness of something.

Consumption:
Destruction of utility, reduces want satisfying capacity.

Exchange:
The transfer of property rights.

Property rights:
Rights held by person who is deemed owner of something to do whatever seems fit to dispose of it.

Specialization:
When people produce more of a commodity than they consume or plan to consume. Requires unequal endowment of resources and trading possibilities.

Opportunity cost:
The opportunity cost of one good is that amount of other goods that must be sacrificed in order to get an additional unit of the good in question.

Sunk cost:
A historical cost no longer relevant to the decision at hand. Sunk costs are sunk.

Syllabus

Here is the syllabus for the course. There may be changes made over the next several weeks. Changes will be announced in class and on this blog.

ECON 306 Section 009
Intermediate Microeconomics
W 7:20-10:00pm, ENGINERING #1110
Office Hours: Thursday 11pm-1pm or by appointment, Enterprise 342
Email: nsnow1@gmu.edu

Course Objective: This course will give an introduction to intermediate microeconomic analysis and price theory, and provide the foundations of economic literacy. The student is expected to have fulfilled the prerequisites for this course and be comfortable with algebra and graphs. Familiarity with calculus will be very beneficial but not necessary. Although attendance is not mandatory, students who attend lectures generally perform better. Most classes will be a mixture of lecture, demonstration, and discussion. Student comments and questions are encouraged and recommended for everyone’s benefit.

Readings: The reading list for this class is extensive. Some topics may not be covered if time does not permit. Students are responsible for what is covered in class, and the readings. Material from the readings will appear on the exams and in extra credit questions. The following texts are mandatory.

Jack Hirshleifer & David Hirshleifer, Price Theory and Applications, 7ed. (Cambridge University Press, West Nyack, NY). HAH
Thomas Rustici, Nathanael Snow, Carrie Milton, Ed., Microeconomics: A Free Market Approach (University Reader Company, San Diego, CA) RSM

The following materials are supplemental and freely available in un-pirated .pdf form online.
D. McClosky, The Applied Theory of Price (MacMillan Publishing Co., NY, NY) DM
Bettina Bien Grieves, Ed., Free Market Economics: A Basic Reader, (The Foundation For Economic Education, Irvington-on-Hudson, NY) BBG

Grading:
Problem sets will be worth 10% of the final grade. There will be two midterms worth 25% each, and the final exam will be worth 35%. An extra 5% depends on student participation, in a constructive capacity.
Grading scale: A 90-100 B 89-80 C 79-70 D 69-60 F <60

Assignments: Students will be given three assignment sets due on September 30th, November 7th, and December 2nd. Each set is worth 3.3% of the final grade. Solutions will be posted to the class website the day after they are due.

Extra Credit: Students will have opportunities to earn extra credit from supplemental readings on homework assignments and on the exams.

Honor Code: Students are expected to know and follow the University Honor Code specified in the student handbook (available at: http://www.gmu.edu/catalog/apolicies/). Cheating or plagiarism will not be tolerated. I will report any violations immediately to the honor committee.

This schedule is a rough outline, and is subject to change.

Week/Date Topic Readings
September 2 Thinking like an Economist HAH 1; RSM Introduction, I, Pencil, DM 1; BBG 1, 19; HO: Wanted: An Unpractical Man
September 9 Demand and Supply HAH 2; RSM Economic Organization of a POW Camp; DM 2; BBG 18, 49
September 16 Consumer Choice HAH 3; RSM Puzzling Questions of Vital Concern...; DM 6; BBG 14
September 23 Consumer Choice HAH 4; RSM To Drill, or Not to Drill?; DM 7; BBG 3, 17
September 30 Consumer Behavior HAH 4; RSM The Formation and Function of Prices, Loot; DM 10; BBG 8
October 7 Midterm 1
October 7 Applications HAH 5; Price Controls, Rent Controls; DM 5; BBG 63
October 14 Knowledge, Information, Exchange RSM Use of Knowledge in Society, Order From Chaos; DM 8; BBG 44
October 21 Exchange HAH 13; RSM Middlemen; DM 11; BBG 65
October 28 Theory of Firm HAH 6; RSM The Nature of the Firm; DM 14; BBG 67
November 4 Competitive Industry HAH 7; RSM Production, Information Costs, and Economic Organization; DM 13; BBG 40
November 11 Midterm 2
November 11 Monopoly HAH 8; RSM J.D. Rockefeller and the Oil Industry, Competition (Except Where Prohibited by Law); DM 17; BBG 71
November 18 Oligopoly/Game Theory Class Handouts; RSM Occupational Licensure; DM 19; BBG 73
November 25 Fall Break, No Class
December 2 Factor Markets HAH 11; RSM Outrageous CEO Pay, Gumball Now or Ice Cream Later?; DM 22, 25; BBG 78
December 9 Political Economy HAH 15; RSM Greed vs. Compassion, Bootleggers and Baptists; DM 16


If you are a student with a disability, please see me and contact the Disability Resource Center (703) 993-2474, all academic arrangements must be made through that office.

Supplemental Texts

Here are links to the supplemental texts for the course.
The first is D. McClosky's The Applied Theory of Price
This link will take you straight to a pdf version of the entire text.
The second is a volume edited by Bettina Bien Grieves, The Free Market Reader.
I trust you will find each of these resources helpful in developing your economic literacy and depth of understanding of price theory.

Welcome to Econ 306-009

Welcome students to a semester in Intermediate Price Theory. I will post on this site from time to time and include links to various items of interest to the course.
Comments are always welcome, and if attributed, may add to your participation grade.
Good luck.
Nathanael Snow